* Oil remains volatile, subject to exchange rate jitters
* Technicals show oil to retrace to below $81[]
* Coming Up: U.S. Fed Chairman Bernanke speech; 1215 GMT
(Recasts, updates prices)
By Joe Brock
LONDON, Oct 15 (Reuters) - Oil hovered below $83 a barrel on
Friday as investors awaited U.S. data and a speech by the head
of the Federal Reserve for clues on the economic outlook in the
world's largest fuel consumer.
U.S. crude for November <CLc1> fell 10 cents to $82.59 a
barrel by 1122 GMT, heading for a third straight weekly close
above $80, while December ICE Brent <LCOc1> lost 24 cents to
$83.96. November Brent expired on Thursday.
The dollar steadied after plumbing a low for the year
against major currencies overnight, having dropped 7 percent
since September on expectations the Fed will soon have to flood
the banking system with freshly printed cash to support the U.S.
economy.
An indication that Fed Chairman Ben Bernanke is getting
close to this decision and perhaps considering other measures
such as targeting inflation or even gross domestic product could
unleash more buying of commodities. []
"The rising prospect of QE2 (quantitative easing) has helped
diminish the market's concerns about the potential for sharp
macroeconomic deterioration, pushing commodity market
fundamentals back into the foreground," Goldman Sachs said in a
research note on Friday.
The dollar dropped to 2010 lows on Thursday, keeping
commodities among investors' top picks, briefly sending oil
above $84, before government data showed U.S. gasoline
consumption fell 1.1 percent in the past four weeks from a year
ago, while total oil demand rose just 0.8 percent.
"The near-term picture of the U.S. oil market remains
challenging," said Stefan Graber, a commodities analyst with
Credit Suisse.
"We expect the range-trading theme in the oil market to
extend, with temporary setbacks below $80 still possible."
Oil prices broke out of this year's predominant $70 to $80
range last month as traders anticipated a fresh round of U.S.
Federal Reserve monetary easing but are now stalling around $80
to $85 as the market weighs immediate economic conditions
against future policy moves.
OPEC
The Organization of the Petroleum Exporting Countries on
Thursday kept intact a supply policy that has served it well for
nearly two years and set aside concerns a weak dollar could
drive the oil price too high for a fragile world economy.
"The biggest challenge we have is to keep the oil market as
it is today," Saudi Arabian Oil Minister Ali al-Naimi told
reporters, voicing his satisfaction with current prices.
[]
For OPEC, "what might in advance have looked like a
potentially difficult year has instead turned out to be a very
constructive one in terms of revenue dynamics," Barclays Capital
analysts headed by Paul Horsnell wrote in a weekly report.
U.S. crude inventories dipped by 416,000 barrels last week,
the U.S. Energy Information Administration said on Thursday but
demand remains fragile amid a stuttering economic recovery,
analysts said.
"The inventory drawdowns in crude oil and oil products look
constructive at first glance," Graber said.
"However, stockpiles fell because of sharply lower imports
and an unexpected drop in refinery utilisation and not because
of improved U.S. oil demand, which remains soft."
The oil market was awaiting Friday's U.S. government data on
consumer prices and retail sales in September, both due at 1230
GMT, and a preliminary reading of consumer sentiment so far this
month.
(Additional reporting by Alejandro Barbajosa in Singapore;
editing by Sue Thomas and James Jukwey)
